Exact Sciences Plunges With Negative Citron Assessment Of 'Poop In A Box' Diagnostics

EXACT Sciences Corporation EXAS plummeted over 7 percent Monday on a Citron Research report predicting a 40-percent short-term value concession and long-term drop to a near-zero single digit.

According to the report, Exact has taken advantage of a “broken healthcare system,” and it’s about to pay up. Citron’s Andrew Left pointed to worsening key metrics — including a flat-lining prescription average of 1.4 per physician per quarter — and impending loss catalyzed by tightened Medicare spending.

“Exact Sciences pushes a cancer test (Cologuard) to the public, inferior by its own admission, and loses money doing it,” Left wrote. “That is why this $4 billion company is mainly owned by passive investing ETFs or other healthcare baskets.”

Exact’s Achilles

Left asserted that Cologuard only received FDA approval to bolster confidence in and encourage community pursuit of colorectal cancer screenings.

“Exact Sciences markets (aggressively, to end user consumers) a ‘poop in a box’ test for colorectal cancer, the rationale being that is less fear-inducing for many people than colonoscopy,” Left wrote. “So, as crazy as this might sound, a $4 billion company exists because some men think they are ‘too cool’ (or too scared) to get a colonoscopy, despite the real dangers of colon cancer.”

Related Link: Vetr Crowd Calls ‘Sell’ On EXAS After Strong Earnings Report

Both Stanford University Medical Center and United Healthcare have identified performance and cost inefficacies in the fecal DNA method, which is expected to fall out of fashion in the coming years. With cancer diagnostics moving toward blood-based tests, Left said Exact Sciences is not positioned to compete.

What’s more, he added that the company garnered Medicare reimbursement essentially by Obamacare loopholes and will soon see them stripped. Because the technique is not the “standard of care” for cancer screening, it is expected to lose sales with the potential rollback of the Affordable Care Act, on which it is largely dependent.

“This stock is a poster child for what goes wrong when Wall Street gets ahold of a health care concept with no discrimination for whether it’s good or bad medicine,” Left wrote.

Exact was trading around $31.61, down 6.4 percent, at the time of publication.